7 min read
This study guide covers inflation, focusing on unanticipated inflation and its costs: menu costs, shoe-leather costs, loss of purchasing power, and wealth redistribution. It examines who benefits (borrowers with fixed interest rates, asset owners) and who loses (savers, fixed-income earners, variable-rate borrowers) from unanticipated inflation. The guide also touches upon the positive effects of moderate inflation and provides practice questions and exam tips.
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Question 1 of 12
What is the best definition of inflation in an economy? 🚀
A decrease in the general price level
A general increase in prices across the economy
An increase in the price of a single good
A decrease in the money supply